What’s Happening
Following recent data released from MCG Quantity Surveyors, it reveals that regional markets are demonstrating higher rental yields compared to metropolitan areas.
Regional Areas Outperforming Metros
“Regional areas are exhibiting higher rental yields than metropolitan areas,” says Mike Mortlock, Managing Director of MCG Quantity Surveyors. “For instance, West Pilbara in Western Australia has house yields of 9.85% and unit yields of 13.12%, driven by strong rental demand in the mining sector.”
Zooming In
Victoria’s Campaspe region reports house yields of 6.23% and 11.28% for units. These yields are influenced by affordable property prices and consistent rental demand. “Regions like Campaspe in Victoria are currently reflecting strong rental yields,” Mortlock notes.
Queensland’s Outback – South and Bowen Basin – North have high house yields at 9.07% and 8.88%, respectively and unit yields at 9.63%. These yields reflect tight rental markets supported by industries such as mining and agriculture.
Local Impact
Risks and Rewards of Regional Investments
However, it’s crucial for investors to consider the risks associated with these regions, particularly in terms of capital growth.
While yields are high, regional areas can be more volatile and may not offer the same long-term capital growth potential as metropolitan areas. “It’s important to balance the attraction of high yields with the potential for capital growth,” Mortlock advises. “Investors should carefully consider the overall risk profile and their long-term investment strategy.”
Looking Ahead
Metropolitan Yields on the Rise
The comparative analysis further shows that yields in metropolitan areas tend to increase with distance from the CBD.
For example, Brisbane’s house yields increase from 2.81% (0-10km) to 4.13% (20-30km) and unit yields from 4.92% to 5.55%. Perth exhibits a similar trend, with house yields rising from 3.38% to 4.70% and unit yields from 5.55% to 6.34%.
Final Thoughts
Diversification is Key
“Investors may find higher returns in suburbs further from the city centre,” Mortlock notes. “However, regional areas are currently exhibiting higher yields, particularly in resource-rich regions. This underscores the importance of a diversified investment strategy that considers both regional and metropolitan markets.”
Read more in the full report: The best inflation-busting property investments in each state
